Digital ad rates drop as advertisers put marketing on hold, shows report

Audiences under lockdown across the country are spending more time than ever before on social media, streaming platforms, and consuming content of all genres. Despite this high traffic, advertising on digital platforms has taken a heavy beating.

Facebook and Google, the two behemoths who attract nearly 80% of all digital advertising spend, have seen a drop in ad spends in March. YouTube’s year-on-year ad revenue growth rate has decelerated and is now in the high single digits. And Facebook has seen both large and small advertisers pull out ads.

As per a BARC India and Nielsen report, digital advertising spends on platforms such as YouTube, Hotstar and TikTok have fallen sharply in categories like banking and finance, retail, durables, automotive and computers. Time spent on smartphones has increased by 16% during the lockdown and data consumption has peaked at 1.21GB per day per user.

In India, digital media buyers have witnessed a minimum of 15-25% drop in ad rates of biddable digital inventory; in some cases, it has fallen by more than 30%. Biddable media refers to all inventory that can be purchased through auction platforms; nearly 85% of digital advertising spends are allocated to biddable media.

According to Mihir Karkare, co-founder and EVP, Mirum India, “Ad rates have dropped because the supply of inventory has increased, as people are spending more time online but the demand has reduced.”

Ad inventory that is sold through direct buying has also been hit. “Some publishers are quite willing to discount certain commitments specifically during this lockdown period; this is primarily on reservation buys,” says Vishal Chinchankar, chief digital officer, Madison Media. Platforms such as Hotstar and Zee5 are selling their programmatic inventory at a discount of about 15-20%.

Brands in categories like e-pharma, OTT video streaming, ed-tech and online gaming have continued to spend on digital advertising through the lockdown. But not all brands that are relevant during the pandemic are advertising online.

Big Bazaar did not see the need to spend on buying ad inventory during the lockdown. “We instead used our social media platforms to inform consumers. In fact, Big Bazaar was among the most searched keywords during the lockdown on Google, so we did not need to push our brand into the consumer’s consideration,” says Pawan Sarda, group head — digital, marketing and e-commerce, Future Group.

Sirona Hygiene halted all digital ad spend until April 15. “We have resumed advertising online now, but we are spending only one third the planned marketing budgets. Although bids/cost has come down but so has the search and fulfilment capabilities. Customers are placing orders but not getting stock in time due to which cancellations are also high,” explains Deep Bajaj, founder, Sirona Hygiene.

While the digital advertising industry will not be able to recover the losses incurred during the lockdown, the hope is that advertisers will return with a vengeance when supply chains resume. “Spends will keep pace with economic activity and we expect that by July-August some kind of normalcy will return,” says Gautam Mehra, CEO, DAN Programmatic, and chief data officer at Dentsu Aegis Network.

The Indian digital advertising industry which is worth about `27,803 crore was expected to grow at a CAGR of 26% as per the GroupM This Year Next Year report. Reduced ad spend as a result of the coronavirus outbreak could halve this growth, say industry watchers.

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